Question 1

TopCo Inc appointed Ethel as its agent to negotiate a building lease on its behalf with DeGroot Realty Inc.At one point in the negotiations,DeGroot says to Ethel that it will buy her a new car if the negotiations are completed by the end of the week.Ethel cannot accept the car unless she obtains the permission of TopCo.

Accepted Answer

A) True 
 B)False  True

Question 2

Tony is a sophisticated business person.Tony's stock broker advises him to buy 1000 shares of Q-Tel at the current market price of $10 per share.The broker's advice is based on a careful assessment of the market and Tony's advice to the broker about his risk tolerance.Tony takes the advice and directs his broker to buy the shares.The shares turn out to be a very bad investment and,after six months,are worthless.Tony has no claim against his broker.

Accepted Answer

A) True 
 B)False  True

Question 3

Rula hired Mike to act as her stockbroker.In that capacity,Mike was authorized to buy and sell stocks on behalf of Rula as her agent.Rula paid very little attention to the details of the transactions that Mike entered into on her behalf.She adopted a very different attitude,however,after she received an anonymous tip that Mike was intentionally inflating the commissions that he received for buying and selling stocks for Rula by making an unreasonably large number of trades for her account.Which of the following statements is TRUE?

Accepted Answer

A)  Mike may be held liable for breach of fiduciary duty even if Mike made money for Rula in the end.
B)  Mike may be held liable for breach of fiduciary duty only if Rula can prove,as a result of that breach,either that she suffered a loss or that Mike received a benefit.
C)  Mike may be held liable only if he breached an express instruction from Rula.
D)  Mike is liable for breach of his duty of care to Rula.
E)  Mike is only liable for breach of a fiduciary duty if Rula can prove that she took reasonable steps to monitor Mike's behaviour. A

Question 4

Mathilde entered into an agreement with Pascal saying that she was acting on behalf of Citron Used Cars to purchase cars.In fact,Mathilde had no actual or apparent authority to do so.Moreover,Citron now refuses to ratify the agreement.In this situation,Pascal can hold

Accepted Answer

A)  Citron liable under the contract.
B)  Mathilde liable under the contract.
C)  Citron liable for breach of fiduciary duty.
D)  Mathilde liable for breach of warranty of authority.
E)  Mathilde liable for breach of fiduciary duty.

Question 5

Berta has entered into an agreement with Boys R'Us Inc to operate a men's clothing store as a franchisee in Scarborough,Ontario.Boys R'Us operates franchise stores in all provinces and has a great reputation as a place where men can get good quality clothes for a good price.One of the advantages to Berta of operating a men's clothing store as a Boys R'Us franchise is that she will likely obtain a licence of the Boys R'Us trademark and the assistance of Boys R'Us in the operation of the business.

Accepted Answer

A) True 
 B)False

Question 6

Jasmine enters into a contract to provide limousine services to Erin.Later,Jasmine tells Erin that she was acting as an agent on behalf of Big White Limousine Services Ltd.Which of the following is TRUE?

Accepted Answer

A)  Erin can enforce the contract against Jasmine alone.
B)  Erin can enforce the contract against Big White alone.
C)  Erin can enforce the contract against Jasmine or Big White,whichever she chooses.
D)  Erin cannot enforce the contract.
E)  Jasmine has the option not to perform the contract.

Question 7

For several years,Jelena worked as an agent for Vladimir,a hockey player for the St Catharines Blackhawks.Jelena regularly negotiated Vladimir's contracts and agreed to them on his behalf.In August 2009,Vladimir terminated the agency.He had decided that he could negotiate his own contracts.He neglected to tell Jelena or the Blackhawks.In September 2009,Jelena signed a contract on his behalf with the Blackhawks for the 2009-2010 season.Which of the following is TRUE?

Accepted Answer

A)  The contract is not enforceable by the Blackhawks because Jelena's authority had been terminated.
B)  The contract is enforceable because,in the absence of notice to the Blackhawks that Jelena's authority had been terminated,she continued to have apparent authority to act for Vladimir.
C)  The contract is enforceable so long as Jelena negotiated a fair deal for Vladimir.
D)  The contract is not enforceable because Jelena was no longer acting in the best interests of Vladimir by negotiating the contract after she was terminated as an agent.
E)  The contract is not enforceable as Jelena was committing fraud by acting without authority,even if her termination had not been communicated to her.

Question 8

Agency relationships arise in which of the following circumstances?

Accepted Answer

A)  Each partner is an agent of the partnership.
B)  Directors,officers,and employees of a corporation can be agents of the corporation for particular purposes.
C)  Agency can only be created by express contract.
D)  Agency can be created only by the principal telling someone that another person is their agent.
E)  Agency can be created by actual authority or apparent authority.

Question 9

Jeremy is a singer.For several months,he and his friend George have discussed the fact that Jeremy needs an agent if he is to move forward with his career.George has proposed that he be that agent.Jeremy has never agreed to George acting as his agent.A few weeks later,however,George attended a negotiating session between Jeremy and a record company.After several hours,George said that Jeremy would agree to the terms of the recording contract proposed by the record company.Jeremy said nothing.There is a contract between Jeremy and the record company.

Accepted Answer

A) True 
 B)False

Question 10

Silken is a producer of snowboards.She wants to enter into a commercial representation agreement with Jason.Under the agreement,he will sell her snowboards on her behalf to retail ski shops.Which of the following is TRUE?

Accepted Answer

A)  Jason will only have the authority to contract with the retail ski shops that Silken actually gives him.
B)  Jason will have no authority to contract with the retail ski ships.Instead,he will buy the snowboards from Silken and resell them to the ski shops.
C)  Jason will only have the authority to contract with the retail ski shops that Silken represents to the ski shops that he has.
D)  Jason will have the authority to contract with the retail ski shops that Silken represents to the ski shops that he has and the authority she actually gives him.
E)  Jason will have to obtain Silken's approval before any transaction he makes is valid.

Question 11

The concept of "apparent authority" is also sometimes known as

Accepted Answer

A)  actual authority.
B)  ostensible authority.
C)  reflective authority.
D)  delegable authority.
E)  mirror authority.

Question 12

Four people,who are not partners,buy and sell a large number of apartment buildings.One of them,Marius,enters into a listing agreement with a real estate agent to sell one building.Marius says that he has authority to bind all four owners to the listing agreement.In fact,none of the others have authorized Marius to enter into the listing agreement,and they have no intention of selling their interests in the building.Which of the following is TRUE?

Accepted Answer

A)  The listing agreement can be enforced against the other owners because Marius did have actual authority to act on their behalf.
B)  The listing agreement is enforceable on the basis that it was entered into in the normal course of business.
C)  Even if the agreement may not be enforced,the real estate agent may have a claim against Marius for defamation.
D)  The listing agreement can be enforced against the other owners because the real estate agent can rely on the statements of Marius to give him apparent authority to enter the contract on behalf of the others.
E)  The listing agreement is not enforceable as Marius did not have actual or apparent authority.The realtor would have inquired as to who owned the real estate and in what capacity and would be alerted by reasonably expected inquiry to the lack of authority.

Question 13

Sharona entered into a contract with Deepak.Under the terms of that agreement,Deepak was obliged to sell his car for $25 000 to Myrna.Sharona subsequently asked Myrna to ratify the transaction and to actually pay the price to Deepak in exchange for the vehicle.Which of the following statements is TRUE?

Accepted Answer

A)  Myrna can acquire the right to receive the vehicle,while leaving the obligation to pay the price on Sharona.
B)  Myrna can ratify the contract if she has capacity at the time of ratification,even if she lacked a capacity at the time that the contract was made.
C)  Myrna cannot ratify the contract even if Sharona said,at the time of creating the contract,that she was doing so on behalf of a person named Myrna.
D)  If Myrna refuses to ratify the contract,Sharona cannot be held liable to Deepak on the contract as long as she said,before the contract was created,that she was acting as an agent for someone else.
E)  Ratification can be effective only if Myrna expressly ratified the contract.

Question 14

Satinder is an employee of Bog Systems Inc.She acts as an agent on behalf of the corporation in that she buys office furniture on behalf of the corporation.Which of the following is TRUE?

Accepted Answer

A)  Satinder can be terminated as an employee at any time by Bog.
B)  Satinder can be terminated as an employee by Bog only for just cause or with reasonable notice or compensation in lieu of notice.
C)  Satinder cannot be terminated as an employee by Bog except for just cause.
D)  Satinder is automatically terminated as an employee by Bog if Bog goes bankrupt.
E)  Satinder can be terminated as an employee by Bog only with reasonable notice from Bog.

Question 15

Information Highway Inc enters into an agreement with Groulx under which Groulx agrees to act as Information Highway's agent in obtaining a permit for Information Highway to build an office tower in St.John.Groulx pays a bribe of $1000 to an employee of the city to issue the permit.Information Highway must reimburse Groulx for the bribe because it is an expense incurred in performing his responsibilities.

Accepted Answer

A) True 
 B)False

Question 16

Sureeya sells jewellery at her store premises.Sureeya agreed to sell Janet's ring as her agent.Janet agreed to pay Sureeya a commission of $100 regardless of the sale price.Under their agreement,Sureeya did not have authority to sell the ring without Janet's approval.After Sureeya put the ring up for sale,Talia offered Sureeya $7500 for it.This was far above the regular fair market price of $5000 because the ring would complete a set that Talia had.Sureeya sold the ring to Talia.Which of the following best describes Sureeya's legal position?

Accepted Answer

A)  Sureeya breached her duties to Janet because she failed to follow Janet's instructions.
B)  Sureeya did not breach her duties to Janet because she acted in the best interests of Janet.
C)  Sureeya did not breach her duties to Janet because she did not benefit in any way from the sale to Talia at the higher price.
D)  Sureeya did not breach her duties to Janet because she exercised adequate care to ensure that she received the best price for the ring.
E)  Sureeya breached her duties to Janet because she could not be sure that the price Talia offered was the best possible price.

Question 17

Grosjean is employed as a truck driver by Newcastle Co.One day while he is making deliveries for Newcastle in its delivery van,he notices that the van is low on gas.He uses his own money to buy gas so that he can complete his deliveries that day.In the absence of a provision in Grosjean's contract with Newcastle to the contrary,Newcastle is obliged to reimburse Grosjean for the cost of the gas because it was an expense reasonably incurred by him in carrying out his duties for Newcastle.

Accepted Answer

A) True 
 B)False

Question 18

You have started a new company that manufactures curling brooms and are looking to sell the product.Marco has worked as a distributor of curling supplies for the last 3 years and has many connections in the area.You want to enter into a relationship with Marco in order to help sell to the retailers in the area,but you are worried about liability under contract.The best thing to do is

Accepted Answer

A)  draft an agency agreement with Marco in which he has actual authority to sell the brooms.
B)  create a distributorship agreement in which Marco must provide warranty service.
C)  license Marco as a franchisee who can sell the brooms himself.
D)  create a distributorship agreement under you will sell at wholesale prices to Marco and he will resell at retail prices to the retailers.
E)  hire Marco as an employee to advise on how to distribute the goods.

Question 19

An agent can be liable for a contract that it negotiates on behalf of an unidentified principal.

Accepted Answer

A) True 
 B)False

Question 20

Hadi wants to buy a car,but he knows nothing about them.He asks his friend,Devon,to act as his agent and buy him a car because Devon works as a mechanic.Devon contacts Nadia,who is selling two cars.One car is in perfect condition and the other needs a new part in the engine.Devon buys both and keeps the car in perfect condition,giving Hadi the one that needs work.Which of the following is true regarding the situation?

Accepted Answer

A)  Devon has breached his duty of care because he failed to recognize the problem with the car.
B)  Devon has breached his duty of care because he was not qualified to assess the quality of a vehicle.
C)  Devon has breached his fiduciary duty because his personal interests conflicted with Hadi's.
D)  Devon was within his right because the option to buy the car could be considered payment for services.
E)  Devon acted within the scope of the agency relationship because he got Hadi a car so he fulfilled his duty under the agency relationship.

Exam 20: Agency and Other Methods of Carrying on Business

Mathilde entered into an agreement with Pascal saying that she was acting on behalf of Citron Used Cars to purchase cars.In fact,Mathilde had no actual or apparent authority to do so.Moreover,Citron now refuses to ratify the agreement.In this situation,Pascal can hold

Jasmine enters into a contract to provide limousine services to Erin.Later,Jasmine tells Erin that she was acting as an agent on behalf of Big White Limousine Services Ltd.Which of the following is TRUE?

Agency relationships arise in which of the following circumstances?

Silken is a producer of snowboards.She wants to enter into a commercial representation agreement with Jason.Under the agreement,he will sell her snowboards on her behalf to retail ski shops.Which of the following is TRUE?

The concept of "apparent authority" is also sometimes known as

Satinder is an employee of Bog Systems Inc.She acts as an agent on behalf of the corporation in that she buys office furniture on behalf of the corporation.Which of the following is TRUE?

An agent can be liable for a contract that it negotiates on behalf of an unidentified principal.